Finance
When Booms Go Bust
What if optimism about the housing market could spread from one confident person to another? New research suggests social transmission could offer an explanation for the boom–bust housing cycle. More →
Finance
Managerial Economics & Strategy
Who Wants to Be First Mate On a Sinking Ship?
Jennifer Brown and David A. Matsa
For the first time, the “sinking ship” effect, in which floundering firms fail to attract necessary human capital, is empirically investigated. Jennifer Brown and David Matsa scour data from a large job-search website to find that, as a firm’s financial health decreases, so do the number and quality of its job applicants. More →
Public-Private Interface
Mapping Toxicity
Markus K. Brunnermeier, Gary B. Gorton and Arvind Krishnamurthy
The recent economic crisis laid bare the shortcomings of current financial reporting practices. Arvind Krishnamurthy examines these shortcomings and proposes a solution: standardized data reporting and, eventually, a “risk map.” More →
Finance
How Bankruptcy Spreads
Efraim Benmelech and Nittai K. Bergman
Economists have long observed the effects of financial contagion, but new research by Efraim Benmelech uses airline industry data to identify a “collateral channel” through which financial woes actually spread. More →
Public-Private Interface
“Equity Tunneling” Affects Market Outcomes
Vladimir Atanasov, Bernard S. Black, Conrad Ciccotello and Stanley Gyoshev
Bernard Black turns to Bulgaria for evidence that laws limiting “equity tunneling” can improve a firm’s valuation. More →
Public-Private Interface
The Price of Pollution
Ion Bogdan Vasi and Brayden King
Companies are often the target of environmental activism, but do protests and petitions actually do anything? Brayden King delved into news articles and financial statements to find out. More →
Finance
Bears, Bulls, and Balance Sheets
David P. Stowell, Evan Meagher and Rebecca Frazzano
In his two-part case Investment Banking in 2008: Rise and Fall of the Bear, Kellogg Clinical Professor of Finance David Stowell examines the trends, companies, and characters with key roles in Bear Stearns’s collapse—and the far-reaching implications for other financial-services players and ultimately the public. More →
Markets & Customers
Peeking Inside the Wallet
Yuxin Chen and Joel H. Steckel
Firms know how often their card is used by customers, but not how often they pay with other cards. Luckily for them, Yuxin Chen has developed a model to do just that. More →
Finance
The Risk of Risk Avoidance
Vasia Panousi and Dimitris Papanikolaou
“Firm-specific risk”—threats to just one company or one small industry segment—is inversely associated with investment spending. Dimitris Papanikolaou investigated whether that association is even stronger when managers own a larger fraction of their firm. More →
Finance
Why Debt Markets Collapse
Michael J. Fishman and Jonathan A. Parker
Functioning debt markets are key to a functioning economy, which is why understanding why they collapse interests economists. Michael Fishman and Jonathan Parker investigate. More →